Insolvency Update: Frost v The Good Box Co Labs Limited

Administrator remuneration lessons from Frost v The Good Box Co Labs

The recent case of Frost v The Good Box Co Labs Limited [2025] EWCA Civ 252 presents an interesting and somewhat quirky scenario that raises important technical questions for insolvency practitioners, particularly around the issue of administrators’ fees. This case, while specific, provides valuable takeaways and highlights the importance of adhering to the correct procedures when it comes to fee approval. It also provides a clear summary of the rules governing the remuneration of administrators, making it a must-know for insolvency professionals.

Key facts of the case

• 28 June 2022: The company entered administration.
• 30 December 2022: The creditors’ committee approved the administrators’ fee estimate of £400,000 based on time costs, but which set an initial cap on fees at £235,000. The Administrators could not draw fees above the £235,000 without further approval from the creditors’ committee.
• 26 January 2023: The administration concluded with the approval of a Restructuring Plan, which included a clause about the administrators’ fees. It stated that any unpaid fees approved by the creditors’ committee would be paid within 14 days, while any additional claims would need to go through an adjudication process or be taken to court for approval.

The dispute over fees

The former administrators sought additional remuneration beyond the £235,000 approved by the creditors’ committee, submitting a claim to the Restructuring Plan administrators. However, the Restructuring Plan administrators declined to approve these additional fees, leading to an application to the court under Insolvency Rules (IR) 18.24 and 18.28.

The court dismissed the application, clarifying that since the remuneration was based on time costs and administrators’ fee estimate, which was subject to the initial cap of £235,000, the administrators could not increase that initial capped amount without further approval from the creditors. Specifically, the court pointed out that the administrators should have made the application under IR 18.30, not IR 18.24 or 18.28.

The court reinforced the point that administrators could only draw fees up to the approved amount of £235,000 without additional consent. This ruling was in line with the case Ex parte James, In re Condon, which emphasises the court’s power to control the conduct of its officers, including administrators. The administrators were bound by the proposal’s limitation, and no further fees could be drawn without proper approval from the creditors’ committee.

As the company was no longer in administration and there was no longer a creditors’ committee, the appropriate person to approve the fees was the Restructuring Plan administrators. However, the approval was not in relation to the basis of the further remuneration as a matter of principle, but only to the quantum.

In the event that dispute could not be resolved, the administrators would have to make a claim against the Company under part of the Civil Procedure rules.

Key takeaways for insolvency practitioners

1. Rule 18.24 applies when the administrator deems the “rate” or “amount” of remuneration insufficient, but it does not apply to time-cost remuneration unless there is an amount fixed under IR 18.16(c).
2. Administrators cannot draw remuneration in excess of the estimate approved by the creditors’ committee, creditors, or the court without additional approval from the creditors’ committee, creditors of the court respectively.
3. Administrators are bound by the proposals they make (however informally made) and cannot exceed the agreed-upon remuneration without obtaining further approval.
4. In some cases where disputes arise over fees, administrators may need to pursue a claim against the company through the Civil Procedure Rules rather than the IR.

In summary

This case highlights the importance of transparency and adherence to procedure when dealing with administrators’ fees. Insolvency practitioners should be aware that any deviation from the agreed fee structures could lead to complications, and in some cases, require court intervention. Understanding these rules ensures that administrators act within the framework of the law, protecting both their interests and those of their clients.